Nonresident Alien Taxation

Many, although not all, of our international students and researchers at MU are nonresident aliens (NRA) for tax purposes. Persons who are nonresident aliens for tax purposes are generally taxed at much higher rates on all U.S. source income than are resident aliens and citizens. Therefore, it is important for NRAs to have a basic understanding of the U.S. tax system and how to minimize overtaxation.

Who is a nonresident alien?

Two U.S. government agencies, the U.S. Immigration and Naturalization Service (now known as BCIS) and the U.S. Internal Revenue Service (IRS) use the term nonresident alien.

BCIS definition: Persons who reside temporarily in the United States in non-immigrant status are known by BCIS as nonresident aliens. The most common non-immigrant statuses at MU include F-1, F-2, J-1, J-2, H-1B, and TN.

IRS definition: For IRS purposes, a nonresident alien is any non-citizen or legal permanent resident who has not resided in the U.S. for more than 182 days in any given year, as evidenced by the Substantial Presence Test (SPT). Persons who meet the SPT will be taxed primarily the same as legal permanent residents and citizens, which may include withholding of FICA from employment compensation.

Persons in F and J student status are exempt from counting days toward the Substantial Presence Test for a period of five tax years. Therefore, as NRAs, FICA withholding will not be required and tax returns must be filed on the Form 1040NR or 1040NR-EZ.

Persons in J-1 non-student status are exempt from counting days toward the SPT for a period of two tax years. Therefore, as NRAs, FICA withholding will not be required and tax returns must be filed on the Form 1040NR or 1040NR-EZ until two years of physical presence have been completed.

NRAs and Social Security Numbers

A Social Security number is not required from nonresident employees before they are allowed to begin work. However, a Social Security number is required before a foreign employee can benefit from a tax treaty exemption from withholding.

On July 1, 2002, the Social Security Administration (SSA) was mandated to verify Social Security number applicants with a U.S. Immigration and Naturalization (now called BCIS) database. While modifications are being made to the system to provide for more expeditious review, this process currently may take as long as 2-3 months. Because of this new system, the SSA requires that newly-arrived nonresidents wait 10 days after their U.S. arrival before submitting an application for a Social Security number.

Yearly volunteers are needed to assist other international students and researchers with tax return preparation under the Internal Revenue Service Volunteer Income Tax Assistance program (IRS NRA VITA site). Volunteers will be trained and certified to assist with preparation of nonresident alien tax returns. To volunteer or for additional information, please contact the MU NRA VITA site Coordinator, Sharon Morris at MorrisS@missouri.edu.